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State Capitol Building, Room 217 • Oklahoma City, OK 73105 • (405) 521-3191 • www.treasurer.ok.gov
A publication of the Office of the State Treasurer • Treasurer Ken Miller, Ph.D.
Economic Report TM
Volume 3, Issue 2 • February 28, 2013
Oklahoma
News and analysis of Oklahoma’s economy
Inside
SEE PENSIONS PAGE 3
• Commentary by Governor
Mary Fallin: Rightsizing pensions
• Presenting the Oklahoma
Treasury Online Checkbook
• January gross receipts make
history
• Gross receipts and General
Revenue compared
• Economic indicators
Contributor
Regina Birchum, Deputy Treasurer
for Policy/Chief of staff
Editor
Tim Allen, Deputy Treasurer for
Communications
The state’s pension problem has been
decades in the making. The root cause
has been promising benefits and not
paying for them. For example, between
1991 and 2005 the Legislature increased
the liability of the Teachers’ Retirement
System 14 times by increasing benefits
without identifying a funding source.
The result was pension systems that,
until just recently, ranked among the
worst-funded in the nation. In recent
years, state policymakers decided to
finally tackle the problem that had been
kicked down the road for decades. The
first action was to stop the problem
from worsening. Between 2006 and
2007, laws were enacted to prohibit the
Legislature from increasing benefits
without funding them and require that
any legislation to alter pension benefits
include an actuarial analysis stating the
true cost of the proposal.
Between 2011 and 2012, additional
reforms were enacted to help stabilize
the pension plans. The largest reform
was to eliminate granting cost-of-living-adjustments
(COLAs) without also
providing funding to cover the expense.
Additional improvements included
increasing the minimum retirement age
for new workers.
Persistent pension problems
All the reforms are expected to have
a positive impact over time, but the
only reform that was immediately
measurable was the unfunded COLA
ban, which overnight reduced the
state’s collective unfunded liability by
$5 billion. However, a year after that
landmark reform, the liability has crept
back up by almost $1 billion due to
lower investment returns. And while
Oklahoma’s pensions are no longer
among the worst-funded in the nation,
they still rank in the bottom third.
Without additional reform, Oklahoma
may be unable to keep the promises
Funded Status of Oklahoma Public Pensions
Source: NEPC, LLC
Plan
Actuarial
Value of
Assets
(in millions)
Actuarial
Accrued
Liability
(in millions)
Funded
Status as of
7/1/2012
Funded
Status as of
7/1/2011
Teachers $10,190 $18,588 54.8% 56.7%
Public Employees $6,682 $8,335 80.2% 80.7%
Firefighters $1,759 $2,886 60.9% 63.7%
Police $1,834 $2,034 90.2% 93.0%
Law Enforcement $688 $879 78.3% 75.9%
Judges $239 $249 95.7% 96.4%
Wildlife $77 $101 76.1% 78.1%
Total $21,468 $33,072 64.9% 66.7%

State Capitol Building, Room 217 • Oklahoma City, OK 73105 • (405) 521-3191 • www.treasurer.ok.gov
A publication of the Office of the State Treasurer • Treasurer Ken Miller, Ph.D.
Economic Report TM
Volume 3, Issue 2 • February 28, 2013
Oklahoma
News and analysis of Oklahoma’s economy
Inside
SEE PENSIONS PAGE 3
• Commentary by Governor
Mary Fallin: Rightsizing pensions
• Presenting the Oklahoma
Treasury Online Checkbook
• January gross receipts make
history
• Gross receipts and General
Revenue compared
• Economic indicators
Contributor
Regina Birchum, Deputy Treasurer
for Policy/Chief of staff
Editor
Tim Allen, Deputy Treasurer for
Communications
The state’s pension problem has been
decades in the making. The root cause
has been promising benefits and not
paying for them. For example, between
1991 and 2005 the Legislature increased
the liability of the Teachers’ Retirement
System 14 times by increasing benefits
without identifying a funding source.
The result was pension systems that,
until just recently, ranked among the
worst-funded in the nation. In recent
years, state policymakers decided to
finally tackle the problem that had been
kicked down the road for decades. The
first action was to stop the problem
from worsening. Between 2006 and
2007, laws were enacted to prohibit the
Legislature from increasing benefits
without funding them and require that
any legislation to alter pension benefits
include an actuarial analysis stating the
true cost of the proposal.
Between 2011 and 2012, additional
reforms were enacted to help stabilize
the pension plans. The largest reform
was to eliminate granting cost-of-living-adjustments
(COLAs) without also
providing funding to cover the expense.
Additional improvements included
increasing the minimum retirement age
for new workers.
Persistent pension problems
All the reforms are expected to have
a positive impact over time, but the
only reform that was immediately
measurable was the unfunded COLA
ban, which overnight reduced the
state’s collective unfunded liability by
$5 billion. However, a year after that
landmark reform, the liability has crept
back up by almost $1 billion due to
lower investment returns. And while
Oklahoma’s pensions are no longer
among the worst-funded in the nation,
they still rank in the bottom third.
Without additional reform, Oklahoma
may be unable to keep the promises
Funded Status of Oklahoma Public Pensions
Source: NEPC, LLC
Plan
Actuarial
Value of
Assets
(in millions)
Actuarial
Accrued
Liability
(in millions)
Funded
Status as of
7/1/2012
Funded
Status as of
7/1/2011
Teachers $10,190 $18,588 54.8% 56.7%
Public Employees $6,682 $8,335 80.2% 80.7%
Firefighters $1,759 $2,886 60.9% 63.7%
Police $1,834 $2,034 90.2% 93.0%
Law Enforcement $688 $879 78.3% 75.9%
Judges $239 $249 95.7% 96.4%
Wildlife $77 $101 76.1% 78.1%
Total $21,468 $33,072 64.9% 66.7%